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Davos and dynamic resilience - more opium or a reflection of how things are?

Davos and dynamic resilience - more opium or a reflection of how things are? Anthony Harrington

The slogan for the World Economic Forum Davos 2013 has had a lot of people scratching their heads: "Dynamic resilience" is not the kind of catch phrase that immediately illuminates a great deal. In many ways, however, it is an apt slogan and is perhaps best viewed as an attempt to put a positive spin on the ancient Chinese curse "May you live in interesting times".

Having been buffeted by one shock after another the advanced economies are getting accustomed to batting off the back foot, ducking the bouncers as best they can and trying to stay awake and alert for the odd scoring opportunity when it comes along. This latter objective is what the "dynamic" part is supposed to bring to the party. Stay positive, but defend in depth, would be another way of putting it. Seen like that it's an apt enough slogan for the present moment in world history. Things is grim, but grim can be good.

Speeches at Davros this year were full of the need to innovate, to look beyond the same old same old, for organisations to focus on being agile as well as resilient. Just battening down the hatches won't work. You have to be prepared to go for it if the opportunity presents itself, or indeed, if it can be conjured out of thin air, as it were. Again, this is pretty much just a rehash of the truism that economies ultimately go forward on the back of entrepreneurial vision, usually coming from left field, and hatched out of someone's back room or garage. Where would the US economy be without Apple? And now that Apple has bombed since its high point some months back, where would it be without Google, Oracle and Microsoft - or the large number of high tech start ups all dreaming of how they might turn into the next Google? What is different this year, perhaps, is the extent to which CEOs from the big household name global companies such as Coca Cola, Dow Chemicals and Nissan-Renault are emphasizing the need for innovation - something large organizations are notoriously bad at. (Most of their patent filings tend to be add-ons to patents filed decades earlier, giving new life to old garments).

Davos often gets called a talking shop, long on speeches and short on action, but many executives attending this year's meeting insisted that they are getting better at the difficult job of turning ideas into actionable content. How that pans out in 2013 remains to be seen, but the optimistic tone was heartening.

IMF Managing Director Christine Lagarde reminded delegates that the global economy was not yet out of the woods. "2013 will be a make-or-break year," she commented (oh great!). The global economy has avoided a collapse, but it needs to stay vigilant against the dangers of a relapse, she told her audience. In particular, politicians in advanced countries need to keep up the momentum on policy actions, Lagarde said:

"For the euro area, it means making firewalls operational; pushing ahead with banking union; continuing with the difficult but necessary fiscal adjustment at the country level; and supporting demand, especially with further monetary easing. For the United States it means pulling together in the national interest and avoiding further policy mistakes..." (Like that will happen...)

Lagarde has had a hectic globe trotting session recently, having been to all the major emerging regions of the world in the last few months, including Africa, Asia, the Middle East and Latin America. This is where the new global economy is taking shape and Lagarde wants to see and to promote "convergence", which in its ideal form would see wealth spread more evenly between countries, since the economies of all would have "converged". At present this is just a pipe dream but Lagarde urged delegates to ponder what she called "four mega-trends shaping the future."  I make no apologies for giving these in full, since who would not want to know what is going to shape all our futures?

  • First, a growing demand for individual empowerment, including for women, and a growing sense of a single global community.
  • Second, a reallocation of political and economic power across the world. By 2025, for example, two-thirds of the world’s population will live in Asia. This can lead to greater cooperation or to greater tension and competition.
  • Third, a seismic shift in demographics, as the “youth bulge” in various emerging regions rubs up against the “graying” populations elsewhere. Sixty percent of the population in the Middle East and North Africa is under 30. It is 70 percent for sub-Saharan Africa. Again, either a great opportunity or a source of instability.
  • Fourth, increasing vulnerability from resource scarcity and climate change, with the potential for major social and economic disruption. This is the real wild card in the pack.

Of course, we can have every confidence that our politicians will chart a successful course through the turbulent waters ahead (hollow laughter). The World Economic Forum picks up on these "four" pivotal points raised by Lagarde in an in-depth report which I will deal with in a future blog or two, but for those who want to read the full report for themselves, the link is here.

Further reading on global instability

Tags: advanced economies , Christine Lagarde , Davos , economic recovery , IMF , world , World Economic Forum
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